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Thread: Granada Real Estate- Thoughts/Insights

  1. #1

    Default Granada Real Estate- Thoughts/Insights

    Well, as I know most of you are all to wise to the ways to be living in Granada, it may not be all that interesting. But, for reasons not worth explaining, I have spent more time in Granada than any other city in Nicaragua. That being said, I have spent decent periods of time in other places (relative to my time in Granada, not relative to other board members), to at least gain some perspective. Every opinion expressed from here on should be disclaimed with "thats just my opinion"...but I'm not going to write it every time for both your sake and mine.

    First, I'll begin by saying that Granada is home to a very diverse crowd of ex-pats. Although generalities are difficult to make, and lines blur when classifying any particular individual, I will say that most fit within 3 different categories.

    Category 1: Typical retiree on a pension. Most lived in Costa Rica for a period of time, but decided to head north in an effort to get more out of their monthly stipend. Typically avoid the out lying areas and live closer to the center. As they have just came from Costa Rica in an effort to save money, they are not willing to pay the ridiculous prices some renters are asking to live close to the center. Instead, they find their decent deals and live within the realms of their pension.

    Category 2: "The faithfull" as I like to call them. These are individuals who have lived abroad for many years, most usually beginning before they were financially stable, and thus have had to secure employment to make their way. These people make up but only a small group, but you get to know them. They look for deals that perhaps locals may be looking for. Because they (usually) speak good Spanish, have friends in the community, and are driven out of economic necessity, they usually find the best deals in town (as far as foreigners go). As an aside...this group is usually very interesting to talk to. A lot of them have very poor things to say bout the people/country yet have a strong dedication to living in Latin America.

    Category 3: People who have just moved here, typically from the States or Canada, but could be any developed nation. Maybe have vacationed in Latin America in the past, but have not lived in it. Don't speak very good/no Spanish but make enough friends in the ex-pat community to get by without really having to learn it to any great extent. These people, not through their own fault perhaps, are the energy input into the system which continues to propel the ridiculous state of the Granada real estate market. The town is small, and you can learn quite easily what the people are paying to live in certain places. Some of the prices you hear really make you think about the motives of some to move down here. Of course, it is not my place to question anyone motives, but when someone tells you "we just wanted to save a bit of money" you wonder how much they were paying previously. There are older couples who have retired into 2 bedroom homes with 800-1100/month rent with nothing to justify that price. This group of people is easily preyed upon by people in the know, usually other gringos in this case.

    I recall visiting "Condominiums Xalteva" just to check it out. As I had assumed, the worst had happened. starting prices, for the small units (2000 sf) were upwards of 110,000, with monthly fees. Granted they had made use of the space (with loft style rooms), but as I left laughing she tried to tell me it was an investment, I asked her for whom?

    There are all to many people who have come to save money and end up spending, I would assume, more or equal to what they could be spending in the states. Now, it could be the fact that they just love living in this new frontier and saving money was not the catalyst to their relocation, but even still, its a poor excuse for getting ripped off.

    Category 3 people serve as energy input to system perpetrated by an even less honest group of people. The real estate companies selling dreams. Which dreams are they selling; I'm not sure. Once again...why would you move to Nicaragua to spend hundreds of thousands of dollars on a house (especially one whose construction and overall comfort often leaves much to be desired). Now, I could perhaps understand if you were buying an old colonial mansion and there was some "historical value" which one could attach to their purpose, but even still. Even worse, many of these agents pass these properties off as an investment. Which lots of people seem to believe. Now, I can tell you that, baring a few rare circumstances, if you go to a real estate office in Granada, it probably is not an investment. Why do I say this....?

    I did some research on the market to find out why so many houses are so ridiculously over priced. I found out that about 8 years ago there was big real estate "boom" in Granada. Lots of people thought it would be the next big place in Latin America, as always with hype, prices rose. Some people ended up buying these homes from 80,000k - 500,000k, some even more. Now, they were waiting for the boom and it never came, all the while they hadn't seen that that was the real estate boom and they bought at the top. The people who sold it to them did what any decent investor does and bought it low and sold it high. These owners, for the most part, are to stubborn to take a loss and you see properties sitting there, vacant, for sale. They are just waiting for the next guy to come along, thinking hes making an investment.

    Interestingly enough...property taxes are supposed to be 1% of the appraised value, but from talking to most Nicaraguans, a lot do not pay the property taxes (why would you when there is no penalty for doing so). Who is apprasing these houses...no one seems to know.

    Its a funny story. You will hear these stories of a property being sold 2 or 3 times, all at ridiculous amounts, each time to someone thinking they are making an investment. The people who sitting pat, waiting for someone else to come along and buy it, are acting as a Market support level. Market prices will have a hard time falling down until that support level is broken. It'll will be a while.

    As well, these real estate companies use these ridiculous prices in a effort to lend credibility to their own advertised prices.

    So, naturally, any investor will say well, there is always a correction after over valuation. But Nicaragua is an interesting case. Back home, if I want to take out a loan, even a personal loan, I will sit down with a loan specialist and he will go through why I want to loan and see if its makes sense financially to give me the loan. Up until your loan is paid off, the assest is the banks investment and the bank wants to make sure they are not over paying for something. With houses, this is serious business. They will usually send(or hire) a a trained guy to inspect the house and give it a general valuation range based on a number of facts (construction, size, location etc.), this keeps sellers honest. In Nicaragua this doesn't really exist, and when it does it is crude and does nothing to serve its purpose. Granted, not a lot of foreigners are taking out a loan from the Nicaraguan Banks to buy a house, but there is an important market aspect missing.

    In the absence of this sense of regulations, a new crop of green "investors" replacing those who were swindled, and a lack of honestly amongst the real estate groups (and in many cases, the new, previously swindled, home owners who are looking to get out even on their investment) all help to perpetuate this horrible market. It would take the, advertised, sale of a number of properties in the 40k range to help this market even out a bit
    Now, group 1 and 2 are typically wise to the game, or don't have the money to enter it so they find reasonably priced properties (assuming they even want to own at all, which most don't), or move away from the center. The group 3 people are just too green, don't understand the market, and are not used to having 98% of the people they come in contact with have a scheme to make a quick buck off of them.

    Like I said...just my observations/opinions.

  2. #2
    House SOB Little Corn Tom's Avatar
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    Default Re: Granada Real Estate- Thoughts/Insights

    Nice post...wish I had something to add.
    Life's different here ... It's a whole 'nother pace.

  3. #3
    Viejo del Foro Just Plain John Wayne's Avatar
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    Default Re: Granada Real Estate- Thoughts/Insights

    Quote Originally Posted by Little Corn Tom View Post
    Nice post...wish I had something to add.
    Lord have Mercy (sp) I cannot fault it a bit either...
    To be called a "Has Been" I must surmise, is much Greater than to be called a "Nevah Been"... JW...



  4. #4

    Default Re: Granada Real Estate- Thoughts/Insights

    When my monthly rent fell between $800 and $1200 in the States, buying a home and then paying a much reduced ($500/month) mortgage made a lot of sense.

    I've heard some in Nicaragua make this same argument.

    The difference is that if I take a bit to look around, I can rent a place for between $60-$80/month in Nicaragua--and these are furnished apartments where clean sheets, toilet paper, utilities, (and sometimes even cleaning) are provided as part of the rent.

    Even at $80/month, that's $960/year, and $28,800 over 30 years (normal life of a loan). Buying simply doesn't make sense down here unless you can find a place for under $30K. I'd assume that most go for half that to locals.
    Soy el chele mono.

  5. #5
    Para aquí para acá Jonh's Avatar
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    Default Re: Granada Real Estate- Thoughts/Insights

    Lots of wisdom in this thread, I hope readers absorb it and use it.

  6. #6

    Default Re: Granada Real Estate- Thoughts/Insights

    You can either live like a Nica or a Usano and the price you pay is somewhere in between. There is a lot about the other half I don't understand tho . . .

  7. #7
    Perico AmandaEllet's Avatar
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    Default Re: Granada Real Estate- Thoughts/Insights

    The information in the thread is very useful for the people who are new in the real estate domain.You have written every minute details regarding that very nicely and carefully covered all the points.

  8. #8
    TRN Science officer bill_bly_ca's Avatar
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    Default Re: Granada Real Estate- Thoughts/Insights

    Nice post, I missed it going by the first time I guess.

    Maria is still set on buying something down there. Being a local , although out of country for more than 25 years, she will have a better chance of getting a reasonable price than if I show my face at any point in the negotiating process.

    Myself I am leaning more to renting something. Mostly for drlemcor's logic.

    Also the new land grab rules worry me for what can happen by a pen stroke. Will see what happens if and when shovels hit the ground..

    .
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  9. #9
    The Bard of Jinotega MizBrown's Avatar
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    Default Re: Granada Real Estate- Thoughts/Insights

    I'm still recommending this post to anyone who shows up on the Facebook group, Expats in Nicaragua, asking about good real estate agents in Granada. I think for some of these people, paying too much to have a sale monitored by an English-speaker is worth several hundred thousand dollars. I'm glad I rented for three and a half years before remotely considering buying a house, and that I have sufficient Spanish to say "negociable? Quince mil."

  10. #10

    Default Re: Granada Real Estate- Thoughts/Insights

    Something (anything) is worth exactly what someone is willing to pay for it. That's true of a house in Granada and a grilled cheese sandwich on EBAY (the one with a pic of the Virgin Mary etched in the cheese).

    Value is in the eye of the beholder, and if the beholder is uninformed, then his perception of value and benefit can be easily skewed. I see no reason to demonize the people who work in this market,, what's the point? It doesn't change the equation.

    Capitalism is about maximizing the return on your capital, whether it's your investment property in Granada, or your time showing that property to a (naive) investor.

    If the buyer isn't willing to do the due diligence required of a good purchase, and I agree that this is of a magnitude more difficult in Nicaragua, and this diligence means some serious time with boots on the ground in the area you are interested in, ,, then is there any special moral obligation on the part of the seller to the buyer (other than to NOT engage in fraud or deceit, i.e.,, "William Walker slept here")?

    I DO agree also with the various posters that, aside from raw land, you CAN rent more cheaply than buy. The problem here, as I see it, is it becomes hard to make the necessary improvements to the property. "It's not mine, can I justify reworking the electrical, the wiring, installing light fixtures instead of living with the Nicaragua standard: bare bulbs hanging from the ceiling?

    If you start doing the math, you can indeed make some improvements and still be way ahead of the game. You can't take the paint with you, but you can take the appliances, furniture, and much of the rest if you decide to move on.

    Due to the way it works in Nicaragua (it's not just the property tax that doesn't get paid . .. ),, , if you maintain the place and pay your rent promptly, you will probably be there as long as you wish to be. Since you are paying in dollars, the landlord is seeing more and more cordobas every month.

    The natural tendency for most of us IS to buy, but Nicaragua is a special case . . and if you are a Gringo paying your rent promptly, of course, the house you are in is going to be worth a lot more to the owner than one vacant, or one rented to a fellow Nica who doesn't pay his rent.

    If you want to buy, consider buying some land or a lot and building your own house eventually ---one you won't have to improve.




    Now, if a guy could just negotiate his rent in Cordobas instead of dollars . . ..

  11. #11
    just diggin' it Outstanding in the Dirt's Avatar
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    Default Re: Granada Real Estate- Thoughts/Insights

    Very useful information methionine. Thank you sooo much.

  12. #12
    Para aquí para acá Jonh's Avatar
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    Default Re: Granada Real Estate- Thoughts/Insights

    Quote Originally Posted by MizBrown View Post
    I'm still recommending this post to anyone who shows up on the Facebook group, Expats in Nicaragua, asking about good real estate agents in Granada. I think for some of these people, paying too much to have a sale monitored by an English-speaker is worth several hundred thousand dollars. I'm glad I rented for three and a half years before remotely considering buying a house, and that I have sufficient Spanish to say "negociable? Quince mil."
    Thank you, there were several people who just signed up here.

  13. #13
    Viejo del Foro bikingo's Avatar
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    Default Re: Granada Real Estate- Thoughts/Insights

    Buying the land and building what you want is way cheaper in Nicaragua and the opposite is generally true in the US. But what Bill the science guy said certainly applies, having a trusted Nica arrange the purchase of your land and the construction of your home is essential. If you don't have family that is Nicaraguan find a lawyer that has impeccable references.

  14. #14

    Default Re: Granada Real Estate- Thoughts/Insights

    at first i kept going back and forth about buying here. But after being here over a year and renting, there is no way i could justify buying a place.
    Especially, when in various housing developments, you can get a more modern home if you cant stand the "nica style" places, for less than 200 a month

    I could never fathom agreeing to pay hundreds of thousands of dollars for a home anywhere here. Especially not from a gringo flipping his place, or a real estate agency. There are far too many locally available places to have to resort to that.

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